Only 14,000 cases selected by PTI govt for tax audit

Current and previous economic managers engage in war of words over economy

Shahbaz Rana April 05, 2019
Representational image. PHOTO: REUTERS

ISLAMABAD: The government on Thursday selected only 14,000 cases for audit due to serious capacity constraints amid an intensifying war of words between the present and past economic managers over a deteriorating state of economy.

The 14,074 cases that the Federal Board of Revenue (FBR) selected through computer balloting were equal to 2.3% of the returns filed in tax year 2017. The low number of case selection could be a cause for concern for the International Monetary Fund (IMF) during upcoming staff-level talks for a bailout package.

The objective of selecting low number of cases was to ensure quality of audit and ease of doing business for the people by not sending them too many tax notices, said Minister of State for Revenue Hammad Azhar while speaking on the occasion.

The minister also said the government would introduce a tax amnesty scheme through the Finance Bill and would not promulgate a presidential ordinance. Finance Minister Asad Umar announced this week that the government was bringing a tax amnesty scheme; though he said no final decision had been taken yet.

Azhar used the audit case selection occasion to criticise former finance minister Ishaq Dar, who in a recent television appearance took the government to task for the massive currency depreciation. Over the past nine months, the central bank has let the currency depreciate by more than 18%.

“Umar should show commitment and take responsibility of the economy,” Dar stated in an Aaj TV show. He said the currency was devalued due to incompetency of the government and to give benefit to those who had financed the Pakistan Tehreek-e-Insaf (PTI) election campaign.

Dar claimed that he could bring the dollar value down to Rs120 from the current Rs141.40, if the government “assigns it the task on contract”.

“Should the government give him (Ishaq Dar) contract for widening the current account deficit, depleting foreign exchange reserves, causing more losses to public sector enterprises and increasing circular debt in which he has the expertise,” said Azhar while criticising the former finance minister.

Azhar went on to say that it was a novel principle of economic management where the currency would strengthen despite a massive increase in budget deficit and current account deficit.

“Do not lecture us on economy as people have seen your economic management and the nation is paying the price of your blunders,” said the minister.

Azhar said there were corruption allegations against Dar and he did not surrender himself to the court as per the law of Pakistan. Dar faces trial in Pakistani courts and has been declared an absconder for his failure to return.

Dar also claimed that the PTI government had given a written commitment to the IMF that it would let the currency weaken to Rs150 to a dollar by June 2019, Rs160 by June 2020 and Rs168.50 by June 2021.

Azhar alleged that Dar had launched a campaign to destabilise the currency market for his own vested interests.

Audit cases

On the basis of risk parameters, the FBR selected 10,982 or 2.3% of cases for income tax audit as against 9.5% selected last time. However, the FBR did not disclose the risk parameters due to legal hindrances.

It also selected 3,126 cases or 2.5% for sales tax audit and another 56 cases for federal excise duty audit.

Azhar said the government was working to improve the human resource quality of the FBR. There are also over 400,000 cases pending for audit that the FBR had selected in the past.

All cases that are already selected for audit are exempted from the income tax audit. Similarly, all cases where the income chargeable to tax under the head of salary exceeds 50% of the taxable income, except cases having business income, will not be subject to the audit.

All cases where the entire income is covered under the Final Tax Regime (FTR) are also exempted from the audit.

Azhar said the government would launch an aggressive campaign to broaden the tax base as the authorities were working on data of nearly five million non-filers. He said the tax amnesty scheme could be offered to provide an opportunity to regularise their hidden domestic and offshore assets.

The FBR has also established three Benami Zones at Karachi, Lahore and Islamabad for the enforcement of Benami Transaction (Prohibition) Act 2017. After examination of the available information, the FBR Benami Zones Karachi and Lahore have issued show cause notices in six cases of companies holding shares and immovable properties as “Benamidar”.

The attachment and confiscation will be concluded after completion of legal formalities, according to the FBR. It added criminal proceedings under Chapter VIII of the Act are also likely to be initiated in these cases.

Published in The Express Tribune, April 5th, 2019.

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